1. Parliament passes electronic media law.
Parliament today passed a Radio and Television Act.
The work of the two electronic media has to date been regulated by an interim
statute adopted over five years ago with an agreement of the political
forces. Over the past couple of years parliament has considered several
drafts of this law.
The law bans the broadcasting of programmes that
offend against the ethic norms, spread libels, or inspire cruelty and violence.
No radio or television body can acquire exclusive
rights for the coverage of events of major public interest.
The law gives radio and television bodies the freedom
to choose the content and length of their programmes independently of state
bodies and independence carries with it full responsibility for these programmes.
Bulgarian productions should make up at least 15
per cent of the programming time of each radio and television body, and
at least 30 per cent for the Bulgarian National TV and the National Radio.
Radio and television bodies should provide extensive
and objective information that corresponds to the truth, and newscasts
should be distinguishable from commentaries. Broadcasters, however,
are under no obligation to disclose the sources of information they have
used.
Special provisions in the law provide for the plurality
of opinion and guarantee against the interference in the private life of
citizens. Propaganda and publicity for illegal religious denominations
are banned.
The law provides for the setting up of a National
Council on Radio and Television to make sure the law is observed and monitor
the signing of concession contracts. The 11-member council will also
appoint and dismiss the chiefs, the managing and programming boards of
the national radio and TV.
A special chapter in the law regulates radio and
TV advertising and sponsorship.
Special attention is given to the Bulgarian National
Radio and TV. They have the status of public organizations of national
importance. The law grants them independence. It also regulates
their management, financing and programming, and provides for the access
to airtime for political figures and government officials.
The opposition protested strongly against some of
the provisions, arguing they contradict the constitution. In the
course of debates, many journalists and intellectuals declared themselves
against the passage of the law.
BTA news agency, Sofia, July 18, 1996
2. President suspends radio and television act.
Bulgarian President Zhelyu Zhelev issued a decree
imposing a suspensory veto on the Radio and Television Act, the president’s
press office said today. The act was adopted by parliament on 18th
July 1996.
The President contests the law as a whole and in
principle due to the large number of objections concerning the basic rules
set in it, reads the press release. Zhelev expresses the hope that
in the further deliberations the MPs will make efforts to comply the law
with the respective provisions in the constitution, the press release says.
Already before the parliament opened debates on
the bill the opposition declared itself against it. Last week Zhelev
held consultations on the act with journalists’ unions and national media
directors. Representatives of the Free Speech journalists’ society
also took a stand against the law. National Radio Director-General
Vyacheslav Tunev voiced the opinion that the law’s weak points, if any,
will become apparent when the application of the law starts.
At present the operation of the national radio and
television is regulated by an interim statute adopted five years ago.
The parliament is in recess as of yesterday and the act will be reconsidered
probably in September.
BTA news agency, Sofia, August 1, 1996
With the country’s Media Law now in place after years
of governmental shilly-shallying, major international congloms are lining
up to take a bite of the TV privatization pie, potentially the most lucrative
in Central Europe.
Bids are required in October for pubcaster Magyar
Televizio’s second channel, MTV2, and state-owned frequency Channel 58.
Three major U.S. and West European investors have announced they’re throwing
their hats in the ring.
Budapest has become the center of what Tim Scott
Hunter, managing director of Initiative Media, calls a “flurry of activity”
by media groups, all eyeing the potentially rich advertising market once
terrestrial commercial TV finally takes off here. “The (privatization)
train is on the tracks,” Hunter says.
“There’s a lot of competition for these channels,”
says Ferenc Tolvaly, president of one of the bidders, Budapest-based MTM
Communications. “And we’re optimistic about the Hungarian government
meeting its deadlines.”
Prominent Western investors who have announced intentions
to bid include Compagnie Luxembourgeoise de Telediffusion (CLT); Scandinavian
Broadcasting System (SBS), which has aligned itself with MTM, and Central
European Media Enterprises (CME), the TV development company lead by U.S.
cosmetics mogul Ronald Lauder. Repped in Hungary by 2002 Kft., CME
already owns nets in the Czech Republic (Nova TV), Slovenia (Pop TV), Slovakia
(Markiza) and Romania (Pro TV). French network TF1 is rumored to
be preparing a bid.
If the MTM /SBS bid is successful, the U.S.’ ABC
/Capital Cities will have a beachhead in the Hungarian market through its
23.4% ownership of SBS. (Last year, ABC/Capital Cities tried to buy
Mafilm Studios, Hungary’s central filmmaking complex, but the sides failed
to reach an agreement.)
Bidders will be competing aggressively for MTV2,
which has a greater reach than Channel 58 as well as an existing audience.
But MTV2 comes with a tab attached: The winner will need to invest about
$ 30 million to relaunch it, and fees for MTV2’s 10-year concession will
be just under $ 7 million annually. MTM’s Tolvaly reckons his company
would incur losses of up to $ 60 million in the first 20 months.
Though smaller and presumably cheaper to purchase,
Channel 58 will require an equally mighty capital injection if it is to
become viable.
“Channel 58 will be a great opportunity,” Tolvaly
says, “if an investor is willing to launch a strong advertising campaign
to promote it.”
Analysts say Channel 58’s 83% overall penetration
rate is less of a handicap to the station’s potential profitability than
is the fact that most Hungarian TV sets are not programmed to receive its
frequency—a setback that can only be remedied by costly marketing in the
print press and in outdoor ads.
But the long-term rewards are seen as sizable in
a TV market that greatly outperforms its neighbors in ad spending.
Last year, without a single terrestrial commercial channel, the advertising
revenue for Hungarian TV was $ 168 million. In the Czech Republic
(same population), it was $ 106 million, and in Poland (four times Hungary’s
population), it was $ 360 million.
Analysts say the advent of commercial TV in Hungary
will cause the TV-radio ad market to grow by 8%, and total ad expenditure
to increase by just under 6%. The ad industry is more optimistic.
According to Initiative Media’s Scott Hunter, ad spending on TV could balloon
by as much as 15% when the two webs start airing.
Although bidding has only begun, investors have
been jockeying for positions for more than a year. Last August,
MTM and SBS created a Hungarian shareholding company, MTM SBS Television,
to represent their joint interests in this market. CME’s local company,
2002 Kft., has been licensed to broadcast in the Budapest market since
April 1995. In the spring, CME purchased the Hungarian dubbing company
Videovox, giving its local broadcasting interests access to Videovox’s
large studio infrastructure, essential to CME for making local programming
and dubbing foreign programs into Hungarian.
2002, scheduled to launch in January as a regional
station, is expected to reach approximately 450,000 households (out of
a total market of 3.7 million) via MMDS and cable. If it wins either
of the licenses, CME reportedly plans to expand 2002 into a national network.
MTM already is active here as a program provider,
producing gameshows such as Hungarian-language versions of “Jeopardy!”
and “Wheel of Fortune” for MTV. CME’s activities throughout Central
Europe make it the most experienced contender.
Variety, August 5—11, 1996
2. One issue involves possible modifications in the recently enacted Media Law to permit more advertising supported programs on public television. Here is an excerpt from an interview with Istvan Petak, chairman of Hungarian Television, by Marianna Mucsanyi, published by the Hungarian newspaper, “Nepszava,” August 10, 1996.
[Mucsanyi] The government’s latest decision
to amend the Media Law would change the method of financing television
and radio. The decision would violate the independence of the media,
even according to government politicians.
[Petak] I do not know the intentions
that underlie this decision. Undoubtedly, the decision that was accepted
and has also been published in newspapers will fundamentally violate the
implementation of the Media Law, the economic and financial stability of
the institutions and their independence, too.
[Mucsanyi] And it would also change the meaning
of public service as laid down in the law.
[Petak] It would not change the Media
Law, which was passed with a two-thirds majority, or the requirements of
public service included in it. It is a different question that it
would make the law’s implementation impossible. By lifting the restriction
on advertising time, it would again push national public service television
towards commercial broadcasting, while it would put the private television
stations that are about to be launched in a disadvantageous position.
It is possible that only fiscal, rather than political goals were in the
background. In my previous interviews, I called the possible consequences
of the proposal tragic. Today, I would not use such a strong term
because, as I have read in the newspapers, the proposals might be changed.
In other words, the public debates of the past few days have convinced
those who submitted the idea that they were wrong, and they realize that
they have to back down. I hope that this is what will happen.
‘Nepszava,’ Budapest, August 10, 1996
3. Radio chairman’s plans for change include staff cuts.
Istvan Hajdu, chairman of Hungarian Radio, has said that although he is not planning radical changes, developments in technology mean that by the year 2000 the organization would only need half its current staff. Operational costs would also be reduced, by eliminating bureaucracy rather than cuts in programming. Hungarian Radio’s priority was to operate well-defined and markedly different channels, making full use of digital and satellite broadcasting technology, he concluded. Following are excerpts from the interview with Istvan Hajdu by Marianna Mucsanyi, headlined “Hungarian Radio will be changed in four to five years”; published by Hungarian newspaper ‘ Nepszava’; subheadings added editorially:
Hungarian Radio Corporation Chairman Istvan Hajdu,
who also ran the institution between August 1988 and August 1990, is not
planning radical changes. In his view, his most important task is
to set up the radio of the 21st century, which, as a corporation with a
streamlined bureaucracy and clearer management, would create a background
for three markedly different channels.
[Mucsanyi] After six years, you are back as
chairman of Hungarian Radio. What kind of institution did you leave,
and what is it like now?
[Hajdu] In the late 1980s, we had an open and
outspoken radio station that discussed problems, and its programmes became
important events of intellectual life. Because of the changes in
political and social life, reports or statements do not now have the same
importance as before. Nevertheless, I believe the radio has managed
to preserve its values.
[Q] According to colleagues, there is nothing
left of the good atmosphere, and the team that was hardened by political
scandals and defined the radio’s image is no longer there.
[A] Indeed, many of the star reporters of the
1980s are not here any more, but as I far as I can see, Hungarian Radio
is still of the highest standard in Europe as regards its intellectual
values. I hope some of the young people will develop into people
like the former “greats.”
Staff cuts
[Q] What changes are you planning, and how
many people can stay on at the radio?
[A] I do not want to make the already tense
atmosphere more unbearable through drastic changes. Without any pathos,
I say that I am thinking in terms of a radio of the 21st century, and the
important thing is to implement the necessary changes by the turn of the
century. It is certain that in 2000, purely because of technical
developments, as few as half as many people will be able to produce the
same amount of programmes at the same high level.
[Q] How will radios operate in four to five
years?
[A] I have already partly touched on this issue.
We must use the most modern technology, and we must become faster and more
mobile if we want to remain competitive in the market. We must also
reduce the operational costs, but rather than saving on classical music,
youth programmes or radio drama, we want to save in the administration
of producing programmes, in organization and bureaucracy.
[Q] Are you worried that public service obligations
will suffer because of the rationalization?
[A] They cannot suffer. We must continue
to provide objective, fast and authentic information. The basic values
of public service cannot be harmed because of a lack of money. We
must show the social problems, provide air time for civic organizations
and national and ethnic groups, and we must pay attention to the growing
stratum in Hungarian society for which, owing to financial reasons, radio
is the only link to culture.
Production guidelines and ethics code
[Q] According to the Media Law, the radio chairman
has to formulate the rules for producing public service programmes.
What will they consist of, and how will they influence the situation of
radio employees?
[A] A code of ethics for producing programmes
will be drawn up on the basis of coordinating the existing rules and the
emerging problems. For example, it will define the employees’ independence
from parties, conflicts of interest, rules regarding minors and several
principles of media ethics. I am only planning major changes in one
area; namely, in employees providing services for other sections.
I believe the rules have to be made stricter in this area. But this
will not be done overnight because I know very well that working for several
sections provides an acceptable standard of living for many people.
The employees will be given time to decide in which area they wish to work.
[Q] Are you planning to use external producers,
as television does?
[A] For the moment, I am not. In our
experience, external production is more expensive. Actually, in the
late 1980s, we tried to set up outside workshops under my guidance.
Even then, the establishment of these workshops met with difficulties.
Although it would be good for the materials to be assessed in a competitive
environment, I do not think we need to push very hard for this.
[Q] To what extent will the radio of the years
to come be a medium involved in politics, and how does it wish to entertain?
[A] Hungarian Radio has to operate well-defined,
markedly different channels. Kossuth Radio’s main task will be to
provide information and handle current affairs. Petofi Radio—I think
this is where we will have the most to do—will have a lighter profile with
a lot of music. I see Bartok as a channel for classical music and
programmes for intellectuals. The developed world follows this model.
Listeners do not look for cabaret and Wagner on the same channel.
Digital technology and satellite broadcasting make it possible for us—just
like television—to cover the same region with more than one programme at
the same time.
[Q] Will the rather narrow advertising market
forestall technical development? How will the media survive it?
[A] There is a given amount of advertising,
and I am not exaggerating when I say that the market is already divided
up. Some change might be achieved with very aggressive marketing,
but there is not a lot of room to manoeuvre. Nevertheless, I am optimistic.
According to the calculations, the commercial radios do have a financial
basis. For example, Danubius Radio, which is a well-functioning commercial
channel, is able to get more advertising income than Kossuth and Petofi
combined. In addition, its maintenance and operating costs are much
lower. It is certain that the commercial channels will have to share
the advertising market because it isn’t going to get any bigger. . . .
Debts
[Q] How far have talks progressed with the
financial administration on Hungarian Radio’s debts?
[A] I hope we shall come to an agreement.
The corporation does not wish to disclaim its debts, but we cannot take
on burdens bigger than the current ones because the institution would then
become unable to operate. No one could want the broadcasting time
to be reduced when throughout the world there are channels broadcasting
24 hours a day that are able to survive. I imagine it would also
be unacceptable for the government if financial problems prevented Hungarians
living outside from getting the news. If the financial administration
insists on making us pay, then we have to reduce broadcasting time and
power. We simply cannot save any other way.
We owe 1.3bn forints to one company alone, Antenna
Hungaria [transmission company]. Some of this debt cannot be disputed,
so we have already used the services of the corporation. [Sentence
as published] However, we are disputing another part of it and have taken
the issue to court. We would like the government to accept our offer;
that is, we are willing to repay some money from the sale of Danubius Radio.
‘Nepszava,’ Budapest, August 10, 1996
4. The following report from Hungarian Radio by Levente Suekoesd, in late July, deals with the future structure of the company.
[Suekoesd] The founding document was finally
adopted at yesterday’s session of the board of trustees. So
the joint-stock company can be set up.
According to the Media Law, the assets of Danubius
Radio [commercial station] were not included in the company’s founding
capital of 4.5bn forints. However, Hungarian Radio can sell the franchise
of Danubius Radio, which is officially estimated at 3.2bn forints.
Gabor Gyoergy, chairman of [Hungarian] radio’s board
of trustees, told “Chronicle” [radio programme] that the leaders of the
joint-stock company would recommend to the Finance Ministry that the state,
as owner of Antenna Hungaria [state-owned broadcasting transmission company],
take over part of Danubius Radio’s franchise to cover the radio’s 1 to
1.2bn-forint debt to Antenna Hungaria.
Istvan Hajdu, chairman of the joint-stock company,
told us he hoped agreement would be reached [on the debt settlement].
Hungarian Radio, Budapest, August 2, 1996
5. To shed more light on the lively debate over government involvement in implementing the Media Law, especially the concern about advertising highlighted in item 1 above, we include the following article from Nepszabadsag, printed at the end of July.
The chairmen of the radio and television boards see
the government proposal on amending the budget and media laws—published
in the 26th July issue of the Collection of Decisions—as an attempt at
renationalization.
Among other things, it can be read in the decision—which
is in the 2000 category—that a proposal will have to be made in a law amendment
to settle the remaining public dues and broadcasting fee arrears of Hungarian
Radio and Hungarian Television (according to the government’s plans, the
debts would be covered by the State Privatization and Asset Management
Corporation and, in exchange, it would keep some of the media assets in
state ownership).
A proposal will also have to be made on settling
the two media’s budget estimates for this year and on redistributing the
income from subscription fees (to Duna TV’s benefit); and 2.5bn forints
will have to be allocated from the budget to compensate in part for the
subscription fees of those excused from paying it for welfare reasons .
At the same time, in order to reduce the budget
costs, Government Decision No 2199/1996 (VII.24) prescribes that the obligation
laid down in the Media Law, according to which the budget was to pay the
broadcasting fee due to the Antenna Hungaria [state-owned broadcasting
transmission] company, has to be cancelled, and the loss has to be counterbalanced
by easing the conditions on radio and television advertising and sponsorship.
The state’s obligation to supplement the operating
fee (also part of the Media Law)—which replaces the subscription fee—has
to be set aside. The National Radio and Television Body’s [ORTT]
licence to settle the collection of fees has to be cancelled, and instead,
the government has to be empowered to regulate this. In addition,
the running of the account by the ORTT and the three media public foundations
with the Hungarian State Treasury has to be regulated.
Gabor Gyorgy, chairman of the radio board of trustees,
said that the public foundation will assess the intentions evident in the
government decision, among which, in his view, intentions of nationalization
can also be detected. The task of the Radio Board of Trustees is
to defend the radio’s independence, even if it has to be defended against
the government, Gyorgy noted.
Andras Kovacs, head of television’s board of trustees,
also expressed his serious concern about the fact that the government does
not want to hand over some of the media assets to the public foundations.
Professional circles would see it as a serious violation of the Media Law
if the government compelled the public media to increase their participation
in the advertising market because this would hamper the launching of private
channels and the strengthening of the public service.
‘Nepszabadsag,’ Budapest, July 29, 1996
[Q] ITI has applied for twenty television frequencies—two
regional licenses in central and northern Poland, plus a number of local
frequencies. Realistically, do you think you will get them all?
[A] From a strictly business point of view,
this is the minimum we should have, because this gives access to about
eight or nine million viewers. If you have less, it’s very difficult
to make commercial sense of it. You need a certain basic portfolio
of your viewers to be able to attract advertising. Otherwise, you
are in trouble.
[Q] Currently PolSat is the country’s only
private national channel, and you aim to be the second one. Is there
room on the market for another?
[A] There is a space certainly for another
private TV channel, countrywide. We think it will create a healthy
situation in the market, because there will not only be competition between
the two private channels, but there will be a certain competition between
state channels and those two private channels. We believe this is
really a healthy market situation. On the other hand, the advertising
market should be able to keep two private stations and two or three state
stations.
[Q] TV Vistula finally went on the air Christmas
Eve after having so many problems. Are there any lessons to be learned
from what they did wrong?
[A] I think it’s obvious that they didn’t have,
and probably still don’t have, enough financial resources. You have
to be prepared to break even after five years. Then another question
is, even if they have enough financial resources, would they be able to
make commercial sense with this license, because this license is limited.
They have access to maybe about four million viewers, and this is their
limit.
[Q] The television council has suggested that
you cooperate with TV Vistula in some form. Do you see a possibility
for cooperation?
[A] We are very open to collaborate with everybody
on this market. And I think the trend among council members is to
recommend such a collaboration. And I think the council might be
also in that respect helpful and creative. And for sue, the larger
access to the market we have the better.
[Q] What kind of programming will you offer?
[A] Programming based on local production.
[Q] Which does not exist right now?
[A] It’s very limited, because state TV has
quite a substantial amount of local production. But today if you
look at what is going on in the TV market, mainly stations are competing
with movies. You have every day ten or more movies. You have
more choices on Canal+, you have state TV . . . .
If you watch PolSat, it’s one movie after the other. And what we
want to provide are talk shows, games, sports, business information, programs
on cooking and good health. And we have checked. There is a
market for these kind of programs. And the more targeted the programming,
the more targeted can be the advertising.
[Q] In December ITI announced a private television
joint venture with Central European Media Enterprises, the London-based
conglomerate controlled by Ronald S. Lauder. How will having
CME as a partner help you in your license applications.
[A] TV is a very expensive project, and you
have to secure financing at a very high level. CME is a typical media
investor. They are less an operator . . . and they
have a certain investment strategy in TV in Central Europe. They
are successful in TV Nova. They started no in Bucharest a TV station
and in a few other places. On the other hand, of course, they can
support us with their technical know-how. As well, they can help
us to source programming from abroad.
[Q] ITI plans to invest up to $30 million over
the next few years to build a 6,000-7,000-square-meter media center.
How does this fit into your long-term strategy.
[A] We would like a part of the media center
allocated to our TV studios and office space for TVN, which will be about
20%-30% of the total space. Hopefully, we’ll be able to construct
the media business center in the middle of this year. We are now
progressing quite fast. If we don’t get the license, we’ll still
build the media business center.
[Q] You’re also planning to invest in building
8- and 10-screen multiplex cinemas around Poland?
[A] That’s another product linked to our very important activity, which
is theatrical and video distribution. We have noticed the huge shortage
of screens. I went to the cinema yesterday. Imagine, I bought
the ticket on the street and paid double. This proves that there
are not enough cinemas. In some other cities it’s even worse.
In large cities like Gdansk you might have one or two cinemas. So
we’re progressing now quite fast with this project. Again, in the
second half of the year we believe we should begin construction.
[Q] But aren’t cinema audiences going down
with people having more access to movies by television?
[A] People want to go, but there are not enough
screens. In 1994, there were about 17 million admissions and in 1995
nearly 23 (million). And this year we expect about 25 to 26 million.
And there is space for more. We as a distributor see this problem
also. For example, for “Golden Eye” we were able to secure only four
screens in Warsaw, because all other screens were booked out by all other
distributors for also very attractive movies. Today this is not the
market of distributors, but this is the market of exhibitors. In
the peak I think we have had 80 million admissions in Poland per year,
and we had something like 3,000 screens. Now we have 700 screens.
In the beginning of the 1990s, the market almost collapsed, because the
price for tickets was in the range of 7 cents.
[Q] How much more will people be willing to
pay? Yesterday the regular tickets when I went to the cinema
were zl. 7, nearly $3. On the street, already $6 was acceptable.
At the beginning of 1995 average tickets were below $2.
2. On June 10, the Warsaw Business Journal published the following on the relationship between ITI and Central European Media Enterprises, whose progress we have covered extensively in the Newsletter.
SBC Warburg is bullish on London-based Central European
Media Enterprises (CME), but not on the company’s planned investment in
Poland with partner International Trading and Investments (ITI).
“CME is one of the most undervalued European TV
stocks,” says a 48-page report by SBC Warburg released last month detailing
the company’s media holdings and plans in Central and Eastern Europe as
well as in Germany. “Moving into the fast growing economies of Central
and Eastern Europe, we expect its new stations to emulate the success of
majority-owned Nova TV in the Czech Republic.”
CME reaches 27 million people in Germany and Central
and Eastern Europe and expects to raise the number to $35 million by the
end of the year. The company has the potential to reach more than
100 million viewers if its current bids for licenses in Poland and Hungary
are successful and operations are launched in Ukraine, the report says.
CME is believed to be a strong contender for pending
regional and national TV licenses in Poland. The company teamed up
with International Trading and Investments (ITI), forming TVN Sp.
z.o.o. in December to bid for several frequencies. Over the
next few years the two firms plan to invest a total of $44.7 million into
TVN. (See WBJ Dec. 15, 1995)
However, SBC Warburg is doubtful about CME’s potential
in Poland.
“In this crowded market we do not expect CME and
ITI to make a major impact,” the report says. “Western and local
programming is plentiful and cable is booming. . . .
The potential 30%-40% coverage for TVN is a little too limited to make
it a major player.”
The report notes that TVN will not have the budget
to compete with large companies that already have agreements with U.S.
and European studios as well as sports broadcast rights. “TVN will
simply not have the budget to compete on equal terms with these players,
especially given CME’s funding obligations to its other operations,” the
report says.
Jan Wejchert, ITI’s president and chief executive
officer, declined to reveal TVN’s budget, but said, “I think were are prepared
to compete with anybody on the market.” He said the programs would
primarily be locally produced, which is what viewers requested.
Regardless of CME’s future in Poland, SBC Warburg
recommends that investors buy the stock: “CME’s stock is high risk but
is an excellent way to gain exposure to a burgeoning media sector in the
fast growing economies of Central and Eastern Europe.”
CME was trading on June 5 on NASDAQ at $25.50.
SBC Warburg says the stock has excellent growth potential, and sets a price
target of $35.
3. A dispute concerning Canal Plus Poland was covered in the following article written for the Hollywood Reporter by Pia Farrell and Eva Giera.
After several nerve-wracking weeks of telecasting without a license, Canal Plus Poland has resolved most of a legal wrangle that threatened its existence, The Hollywood Reporter has learned. The fast-growing Poland pay TV channel led by French pay TV giant Canal Plus said that it received a new broadcasting license for satellite transmission and is expected to receive its terrestrial licenses in the next few weeks. The renewed authorization came after Poland’s supreme administrative court ruled in June that two pay TV licenses issued by the government regulatory agency were invalid. The court decision, which did not receive wide attention at the time, held that the National Council of Polish Radio and Television didn’t follow its own procedures in issuing a 1994 license to Canal Plus Poland. Though the pay TV channel was not involved in any wrongdoing, its authorization was said to be in jeopardy. The court also decided to annul a license granted to Polish regional channel Telewizja Wisla, although it too is expected to receive a new license soon, sources said. Canal Plus Poland legal director Piotr Kriczek said in an interview that he expects the channel will receive terrestrial licenses by early September. Canal Plus Poland was originally granted 14 terrestrial transmitters in the country’s main cities. The service covers the rest of the territory via satellite. However, sources in Poland expressed doubt that the coveted terrestrial franchises will be relicensed quickly or that Canal Plus Poland will automatically regain them all. In 1994, there were 48 applicants, who have been notified of the current relicensing and may make new applications. Kriczek indicated the channel would consider taking the Polish government to court if it did not grant terrestrial licenses. But this appears very unlikely. ‘‘There is no reason to consider such a possibility at this stage,’’ Kriczek said. Total paying subscriptions at Canal Plus Poland stood at 67,194 as of June 30, up from just 18,966 at the same time last year.
The Hollywood Reporter, August 13, 1996
4. Ameritech and France Telecom fight Poland on cellular project.
Ameritech and France Telecom (FT) accused Poland
of jeopardizing Centertel joint venture with govt.-owned Telekomunikacja
Polska SA (TPSA) by refusing to award wireless license, terminating interconnection
agreements and blocking approval of budgets. Walter Catlow, pres.,
Ameritech International, said company remained committed to project launched
in 3-way deal in 1991, despite recent setbacks in relationship with govt.
carrier. But company said “expansion and future operation of this
national asset is in jeopardy” by govt. denial of Global System for
Mobile (GSM) communications license. Companies said relations have
grown hostile, with Warsaw govt. threatening to dissolve partnership.
TPSA spokesman, reached by Reuter Fri., declined
to comment on Ameritech statement, saying issue wouldn’t be resolved in
media. Communications Minister Andrzej Zielinski claimed 1991 agreements
with Ameritech and FT were signed by different govt. and therefore
don’t apply to current regime. In statement late Thurs. in
response to reports Centertel would be dissolved, Catlow said: “We have
a great deal of history with Poland and with Centertel, and we hope to
continue our strong and successful relationship, despite the unfortunate
actions and misunderstandings that have taken place.”
Ameritech and FT took offensive in dispute by filing
$1-billion lawsuit with International Court in The Hague, charging Warsaw
with violating terms of agreement set down when Centertel venture was formed.
Issue is in arbitration. RHC said receipt of GSM license was precondition
for Ameritech to get involved in project as 24.5% partner. FT has
similar stake, with TPSA retaining majority. However, in agreement
Ameritech and FT agreed to provide all capital to launch Poland’s first
cellular service, which now reaches 100,000 customers and employees 600.
Companies also guaranteed to provide financing, management and equipment
for network.
In recent months govt., has denied GSM license and
TPSA has opposed upgrading analog network to digital. “TPSA has taken
steps that appear to have as their goal either the removal of the foreign
partners from the joint venture, or the destruction of the company’s business,”
Ameritech said. It charged TPSA had wrongly taken 4 actions: (1)
Blocked budget approval for previously planned expansion and upgrade.
(2) Paralyzed management by blocking replacement of dir. general
by foreign partners. (3) Unilaterally ended interconnection agreement,
denying company access to revenue, and demanded new terms “under which
it cannot operate profitably.” (4) “Caused the company’s remaining
capital resources to be drained by effecting a default on, and thus mandatory
prepayment of, Centertel’s loan from the [European Bank for Reconstruction
and Development].”
Ameritech said interconnection dispute also threatens
introduction of digital service by other carriers, since order terminating
Centertel agreement “expressly states that all cellular operators will
make settlements with TPSA on the same terms.” RHC said it tried
to solve problem by offering various alternatives, including adoption of
provisional contract in which negotiated fees with other GSM operators
would be binding and backdated to apply to Centertel. “TPSA rejected
these offers, deciding instead to extort acceptance of its own rates from
Centertel—and then apply them possibly to the new GSM operators,” Ameritech
said.
Dispute has continued for 15 months, and “no progress
of any significant nature has been achieved. In fact, negotiations
have not only been unfriendly, but have been conducted in an atmosphere
of hostility in which the representatives of TPSA have repeatedly threatened
to dissolve Centertel unless their demands are met,” Ameritech said.
Communications Daily, August 26, 1996
5. Former public TV chairman fears political interference in programming.
In a conversation with a ‘Gazeta Wyborcza’ [daily
newspaper] journalist [former public TV chairman] Wieslaw Walendziak said
while commenting on some decisions taken by the Polish Television board
that the aim of them was to have programmes made by journalists who are
totally dependent on the company and at its disposal. The decisions
concerned excluding independent outside producers from news and current
affairs programming.
The former head of the TVP SA [Polish Television
Joint-stock Company] said that the programme “Bez znieczulenia” [English:
Without Anaesthetic] which had been planned would not now be made because
he did not agree with making it under the supervision of employees who
had formerly been subordinate to him, as the management had suggested .
Walendziak revealed to the newspaper that, among
other things, he had heard from the present chairman, Ryszard Miazek, that
“hard times are coming, there will be political entanglements, and news
and current affairs programmes have to be made within the TVP, because
only then is there a guarantee that they are safe.”
“In my opinion”—Walendziak said to ‘Gazeta Wyborcza’—“television
will be more fearful and more compromising. This will certainly please
the powers that be. Will it, however, please the viewers?” (An extract
of an interview with Wieslaw Walendziak entitled “Frightened television”
given to the ‘Gazeta Wyborcza’)
PAP news agency, Warsaw, August 14, 1996
6. Main parties accused of “eating up” TV.
The Freedom Union (UW) and the Democratic Left Alliance
(SLD) have been “eating up” public TV with increasing greed, said spokesman
for the Movement for the Reconstruction of Poland (ROP) Jacek Kurski [on13th
August]. As an example he stated the current TV board intention to
close down the “Puls dnia” (Pulse of the day) programme, a popular current
political feature, in several months’ time.
Acting against the law on the Radio and Television,
the National Radio and Television Council (KRRiT) has been preventing ROP
leaders from participation in the “Forum” TV panel discussions for several
months now. As many as ten parties are taking part in the programme,
“some of which having literally nil support, but it is ROP that has no
representatives there,” Kurski complained.
A series of talks with Adam Michnik, the mass circulation
daily ‘ Gazeta Wyborcza’ editor in chief, has been repeatedly aired by
the Second TV Programme in several-day intervals. It is intended
as Michnik’s “own life story, presented by a close friend, Mr. (Jerzy)
Markuszewski,” Kurski charged. He claimed he could not remember when
right-wing politicians like ROP leaders Jan Olszewski and Antoni Maciarewicz,
or Piotr Wierzbicki enjoyed programme cycle of this kind.
PAP news agency, Warsaw, August 13, 1996
By Marlene Edmunds
A nasty legal punch-up is taking place between two
feisty international players concerning a small commercial TV station in
the tiny Adriatic nation of Slovenia.
Scandinavian Broadcasting System (SBS) and Central
European Media Enterprises (CME) have filed a flurry of rival claims in
the past two weeks over control of Kanal A, one of two commercial terrestrial
channels in Slovenia. CME already owns the other one, Pop TV, while
SBS has a 33% stake in Kanal A and is determined to prevent it from falling
into CME’s hands.
At stake is an estimated $ 50 million-$ 100 million
in future advertising revenues in that territory. The richest and
most industrialized part of the former Yugoslavia, Slovenia now is regarded
as prime real estate in the search by Western players for new territories
in Central and Eastern Europe.
CME, headed by Ronald Lauder, heir to the Estee
Lauder cosmetic fortune, launched Pop TV, a general entertainment format
whose two transmitters give it a 60%-72% national reach, but acquisition
of Kanal A and its six transmitters would extend penetration to 85% of
the country.
After CME and its Slovenia partners announced July
4 they had acquired a 66% stake in Kanal A, SBS—which had bought its one-third
share only a week earlier—moved to block the sale. It charged in
London and Slovenia courts it had the right to approve all new shareholders
and, by previous agreement with the channel’s owner, to buy additional
stakes in Kanal A. CME counterfiled to prevent SBS, a group partially
owned by Disney/ABC, from interfering with its rights.
On July 12, SBS won an injunction in Slovenia preventing
the CME transaction from going forward, but the legal fray is expected
to be far from over, and the aggressiveness of the campaign on the part
of these two players is a sign of the increasing importance of the region.
CME has established itself as a front-runner in
commercial television in Central and Eastern Europe with the runaway success
of its Nova channel in the Czech Republic. It is set to launch a
new outlet in Slovakia in late August, and is a bidder for the Hungarian
private terrestrial TV license.
SBS has a network of successful channels scattered
across Scandinavia and the Benelux, and pegs itself as a small- and midsize
market specialist, although its failed bid last year for the U.K.
Channel 5 license clearly signals it could be lured into bigger territories.
CME president Leonard Fertig told Variety he had
been negotiating the deal in Slovenia since March and had been “surprised
to learn SBS wanted to be a competitor in a market the size of Slovenia.”
Adding to its Scandinavian and Benelux holdings,
SBS chairman and CEO Harry Evans Sloan told Variety that Slovenia was part
of his group’s “third front” in Europe, and was “integral to SBS plans
in the region.”
“Austria, Hungary and Slovenia are all consumer-oriented,
healthy economies, and because of their locations, we see them as a nice
bridge into Eastern Europe,” Sloan says.
He adds: “We believe Western Europe is getting pricey
and competitive, which is good news and bad news. Our Western European
assets are much more valuable, but it’s hard to buy new ones. In
Central and Eastern Europe, there’s more economic risk, but also more opportunity.”
Variety, July 15 – 21, 1996